Discussion Paper (continued)
In a new Harvard Project Discussion Paper, Fondazione Eni Enrico Mattei's Valentina Bosetti and Enrica De Cian model the behavior of countries not participating in a cooperative climate regime. The regime imposes counterbalancing influences upon these countries, but under some conditions they may act to both reduce emissions and increase clean-energy R&D
By Joseph E. Aldy, Faculty Affiliate, Harvard Project on Climate Agreements and Robert N. Stavins, Albert Pratt Professor of Business and Government; Member of the Board; Director, Harvard Project on Climate Agreements
Market-approaches to reducing emissions of greenhouse gases lie at the heart of any cost-effective set of policies put forward in an international agreement—and will be considered at COP 17 in Durban in both the Kyoto and Long-term Cooperative Action discussions. Joseph Aldy and Robert Stavins "examine the opportunities and challenges associated with the major options for carbon pricing: carbon taxes, cap‐and‐trade, emission reduction credits, clean energy standards, and fossil fuel subsidy reductions."
Geoengineering grows in salience, the more time that passes without an effective international regime for mitigating climate change. It will be in the background of negotiations at COP 17 in Durban—and, perhaps, in the foreground of some important discussions. This discussion paper by Daniel Bodansky explores the opportunities and risks presented by geoengineering, as well as the particular challenges to crafting an effective system of governance for this set of approaches to addressing climate change
"Sustainable Cooperation in Global Climate Policy: Specific Formulas and Emission Targets to Build on Copenhagen and Cancun"
In pursuit of a workable successor to the Kyoto Protocol, this study offers a framework of formulas that produces precise numerical targets for emissions of carbon dioxide (CO2) and other greenhouse gases, in all regions of the world in all decades of this century....Firms, consumers, and researchers base their current decisions to invest in plant and equipment, consumer durables, or new technological possibilities on the expected future price of carbon: If government commitments are not credible from the start, then they will not raise the expected future carbon price.
In order to induce investment in research and development, incentive-based instruments such as emissions taxes and carbon cap and trade have to be expected to be in place after the new technology comes to market. This can be several years after the decision to invest in R & D is made. Policies announced or put in place today can be changed. To put it simply, there is a commitment problem. This commitment problem does not apply to policies put in place today that lower the cost of R & D, such as subsidies or complementary investments by public-sector entities. We compare the effects of an emissions tax, an emissions quota with tradeable permits, and R & D subsidies on a firm’s incentive to conduct R & D in the absence of commitment by the government.
"Beyond Copenhagen: Reconciling International Fairness, Economic Development, and Climate Protection"
By Jing Cao, Former Research Fellow, Environment and Natural Resources Program, 2002-2003
This paper proposes a new architecture for international climate policy that might usefully be considered by delegates at COP 17 in Durban. It highlights a top-down approach that is designed to produce a fair distribution of burdens across countries, while achieving objectives of: (a) economic development; (b) decreasing wealth inequality; and (c) emission reductions consistent with holding the expected increase in global average temperature to 2 degrees Celsius. In addition, this discussion paper discusses several key design elements that will be important, especially from the perspective of developing countries, to the success of COP 17 and subsequent international climate negotiations. These design elements include agreements on burden sharing, choice of policy instruments, financial mechanisms and technology transfer, penalties for noncompliance, and linkages between trade and climate change.
By Robert N. Stavins, Albert Pratt Professor of Business and Government; Member of the Board; Director, Harvard Project on Climate Agreements
Harvard Project Director Robert N. Stavins reviews economics research on open-access resources over the last century; the development of market-based policies to respond to commons problems; and the application of policy-relevant scholarship in economics to the "ultimate commons problem"—global climate change.
This paper is mostly about conceptualizing the problem of high-temperature catastrophic damages and giving some rough sense of the magnitudes involved via particular numerical examples. It is less about giving decisive numerical values for actual practical policy advice, although some policy implications will become apparent.
Because forests play a critical role in the global carbon cycle, the international community is actively pursuing policies and programs to increase the amount of carbon stored in forests. Recent estimates suggest that forestry could contribute an average 6.7 billion tons of emissions reductions annually, with over two-thirds of this potential coming from tropical nations. Making full use of the forest carbon sink is appealing to both the developed and the developing world. Developed nations see forest carbon projects as a low-cost option for mitigating climate change. For the developing world, forest carbon payments could provide a sustainable source of much-needed income. At the most recent climate negotiation talks in Copenhagen, even as negotiations on greenhouse gas emissions limits stalled, the parties moved closer to a framework agreement on forest carbon.
This paper describes and evaluates the system for trading CO2 emission permits introduced by the European Union to encourage the reduction of greenhouse gas emissions to help abate climate change. This system represents a live example of a functioning trading system under the so-called cap-and-trade approach to limiting greenhouse gas emissions.